Canada’s private automobile insurance companies gouge almost all their customers. But there are exceptions.

Say you’re a female alcoholic in Ontario with three or more reckless driving convictions. You’re able to keep your driver’s licence because soft-hearted judges keep falling for your promises to reform. You are not only entitled to automobile insurance, you’re entitled to get it at a discount: These days, preferred customers -drunks like you – get your insurance at 50% off.

Say you’re an 18-year old male in New Brunswick with no accidents but lots of hormones. Your dad has sprung for a brand new fuel-injection supercharged car capable of travelling twice the legal speed limit.

If you wanted to drive a used Chevy or Ford – starter cars for lots of teens – the insurance company would only offer you a standard policy. But because the car’s price tag, its power, your inexperience and your hormones add up to a catastrophe waiting to happen, your merit a 45% discount.

Say you have speeding convictions as long as your arm. Or that you can’t resist running red lights on your motorcycle. Or that you’ve maimed people while driving your all-terrain vehicle, or that you’ve driven your snowmobile into the lake at 100 kilometres an hour. In these cases, too, you are entitled to a discount on your vehicle insurance in every province and territory of Canada except Alberta and Nunavut. In most of the jurisdictions, the discount comes courtesy of a non-profit organization called the Facility Association, which was set up for the sole purpose of keeping otherwise uninsurable drivers on the road. FA provides the private insurance companies with the money needed to make sure our tow trucks, auto-body shops, hospital wards, and mortuaries don’t become idle.

And where does FA get the money needed to provide this public service?

FA’s money comes from one source – low risk drivers. By law, the various provincial and territorial governments require any private insurance company that wants to do business in their jurisdictions to overcharge these good drivers, and these good drivers alone, through a hidden tax embedded in their premiums.

The amount of money spent to keep inept, inebriated, or otherwise uninsurable drivers and their vehicles on the road can be staggering. In 2003, according to FA’s projections, good drivers in Ontario – by far the hardest hit group – will be overcharged in excess of $300 million.

In some ways, Ontario drivers are luckier than those in other jurisdictions. Only about one in 33 Ontario drivers doesn’t qualify for standard insurance, and relies instead on FA to provide coverage. In the Maritimes, the number of FA-dependent drivers increases to about one in 20 and in the northern territories, to one in six.

FA provides its public service for commercial vehicles, too. In earlier years, only niche insurers such as Lloyd’s of London dared insure high-risk vehicles, such as those off-road logging trucks that go barreling down rural routes. Now, Lloyd’s of London is out of that business and the logging trucks get covered by FA. So do other high-risk commercial vehicles such as long-haul tractor trailers and, increasingly, taxis. In the same way that policies for low-risk private passenger vehicles subsidize those with high risks, low-risk commercial policies subsidize the high-risk ones. This not only keeps dangerous commercial vehicles on the road; it raises the cost of doing business for the more benign businesses.

FA’s disservice to society doesn’t end with the money it extracts from low-risk drivers. The high accident rates that result from encouraging unsafe driving increases traffic congestion, policing costs, medical costs and, when accident victims become unable to work, a host of employment-related costs. To the high financial toll must be added the wholly unnecessary and wholly unconscionable body count.

Before Canadian governments decided to intervene so perversely in the insurance marketplace, the interests of auto insurers and those of the general public were remarkably harmonious. Both suffered when accidents occurred; both profited from insurance company policies that increased premiums as the risk increased. Both could breathe a sigh of relief when companies could refuse to issue high-risk policies.

Somehow, Canadians came to see insurance companies as arbitrary when they refused to issue a policy and to believe the well-meaning advocacy groups that argued to keep high-risk drivers on the roads. Ignorant or spineless provincial premiers – Alberta’s Ralph Klein joined the club just this week by proposing legislation to encourage teen driving – are taking us further down the road to unaccountability. Some day it will stop, because the carnage will become too great. Until then, buckle up and protect yourself in an SUV or a Hummer if you can afford one.

Lawrence Solomon is executive director of Urban Renaissance Institute and Consumer Policy Institute, divisions of Energy Probe Research Foundation. LawrenceSolomon@nextcity.com.; One of a series.